Victoria’s dysfunctional building permit system

The Age Dec 8, 2011 Adam Carey

JO KEIGHLEY and her family wanted a bigger house, so in 2009 they went online and found a local registered builder. The builder issued a warranty insurance certificate, the surveyor accepted it and issued a building permit, and the Keighleys signed a $122,000 contract for an extension. Such are the administrative means by which suburban dreams are expedited every day.

But what Keighley didn’t know was that the builder was bankrupt and had a criminal record, and the insurance certificate was fake. Almost two years later, the Keighleys are still paying the price for the failure of the state’s dysfunctional building permit system, which was savaged yesterday in a report by Victoria’s Auditor-General, Des Pearson.

Jo Keighley has serious problems with a builder and Govt. agencies have so far failed to act. Pearson, who found problems with 96 per cent of 401 building permits audited, described the system as confused, inadequate, and with scope for collusion and conflict of interest.

In the report he writes that the permit system “depends heavily on ‘trust’ which is neither guided nor demonstrably affirmed by reliable data on the performance of building surveyors”.

The head of the Victorian chapter of the Australian Institute of Building Surveyors, Con Giazi, says the Auditor-General has highlighted an ”industry-wide problem”, but that the problem is no more than a “failure to properly fill in paperwork”.

Peter Quartel, who was assaulted by a builder who was doing extensions to his home in 2009. After the report was tabled yesterday, Victoria’s Building Commissioner, Tony Arnel, defended the regulatory standards of the building industry.

”We’ve got to keep in perspective exactly what this audit has been about,” he told Jon Faine on ABC Radio. ”It has been solely based on paperwork, so it’s quite narrow. It has looked at private surveyors’ lodgments at councils.”

Pearson’s report also identified serious deficiencies with the Building Commission’s complaints handling processes, as well as its monitoring of building surveyors. “The commission’s staff do not have sufficient guidance on how to investigate complaints and there are no standards for reporting on the effectiveness of investigations,” the Auditor-General wrote ”The commission’s audits, and risk and complaints management processes are ad hoc and marked by poor documentation and lack of guidance.”

In October last year, Victoria’s consumer protection system for home owners was identified in a State Parliamentary inquiry as “fragmented and poorly co-ordinated” owing to changes introduced in 2002 amid a crisis in the building industry brought on in part by the collapse of insurer HIH.

Yet since those findings by an intergovernmental standing committee were published last year, nothing has changed – although the Auditor-General has foreshadowed another audit of builders’ warranty insurance next May.

The story of the Keighleys’ building nightmare and their inability thus far to bring their builder to account exposes this failure in the regulation of the state’s building industry: before he began causing major problems for the Keighleys, he had wreaked havoc on another family.

During that time, the builder was allowed to carry on working in breach of Victoria’s building laws, even though three government consumer protection agencies had been notified in writing about his criminal history and alleged breaches of building and bankruptcy laws.

What Jo Keighley, an English language teacher, did not know when she employed the builder, Tim Watson of Wat’s On Top Constructions, in March last year (2010), was that he had recently been convicted of assault after attacking a client in his own home nine months earlier.

She also did not know that the client who had been assaulted, civil engineer Peter Quartel, had just written to the then Minister for Consumer Affairs in the Brumby government, Tony Robinson, detailing his extreme frustration in trying to get regulatory authorities to pursue Watson. In his letter Quartel asked the minister to identify whom he should turn to.

In February 2008 Quartel entered into a contract with Watson to complete a $110,000 extension at his house in Box Hill North. But the 12-week project was hit by delays and defective works that dragged it deep into 2009, with Watson at times requesting premature stage payments, saying he had no money to finish the job otherwise.

Seeking to end the brinkmanship, the Quartels approached Consumer Affairs Victoria and the Building Commission in July that year and asked them to facilitate conciliation with Watson. The builder responded by erecting a fence around the family house, barring the Quartels from entering their own property.

Quartel went back to Consumer Affairs, who said they could arrange an inspection of his house some time in the future. Not prepared to wait, he took Watson to the Victorian Civil and Administrative Tribunal, where it was agreed that the contract would be terminated and Watson would pay for the cost overruns.

Now more than $80,000 out of pocket, Quartel was forced to hire another builder to finish the extension, and try to compel Watson to pay him what he was owed. It was in this poisonous environment that he contacted another of Watson’s clients, to see if they had struck similar problems.

In response, an enraged Watson visited the Quartels’ house. Quartel knew the dispute had got wildly out of hand the moment a brick crashed through his front window and Watson barged through the front door. Suddenly, the father of three was desperately defending himself on his hallway floor, wrestling with a man who had just threatened to break his legs.

”Tim is a very large man – if it came down to a fight between him and me the odds were well in his favour,” Quartel says. ”So it was no time for heroics.”

As the two men grappled on the floor, Quartel started shouting as loudly as he could and managed to attract the attention of two neighbours. Watson left before anyone was seriously injured, but the psychological damage has been more telling.

”We live with the doors locked, and even now if there’s a knock at the door we’re not expecting, there’s still a shiver that goes through us,” Quartel says. But for him, being attacked in his own home in front of his terrified seven-year-old son is not the most disturbing part of the story.

It is the fact that his assailant was able to carry on practising as a registered builder long after he was convicted of assault in the Ringwood Magistrates Court (and long after a string of other alleged criminal acts were brought to the authorities’ attention) and then to go on and cause problems for Jo Keighley and her family.

The Keighleys’ difficulties with Watson were virtually identical to those experienced by Peter Quartel. The family’s extension project was left an unfinished mess, the contract has been revoked after an independent inspector judged the work ”to a poor standard with many defects evident”, and the Keighleys had to take the builder to the Victorian Civil and Administrative Tribunal in an attempt to recover money to complete the job.

Jo Keighley’s decision to go through with an inspection broke what was already a strained professional relationship with Watson. ”When I told him I’d had an inspector his manner changed, he became gruff and aggressive and started swearing at me,” she says.

Watson had declared bankruptcy in August 2009. In a Supreme Court order from the same month, the Quartels appear on a long list of creditors owed a total of more than $300,000 by the builder.

However, bankruptcy did not stop Watson from taking on more building work, in defiance of insolvency laws. This is when he issued the phoney insurance certificate to Keighley – for which Watson was convicted in June this year in the Frankston Magistrates Court (2011) and sentenced to three months’ jail, to be served in the community as an intensive corrections order.

But although the builder has been convicted of two serious offences, Peter Quartel and Jo Keighley have had no success in their long-running quest to bring him to account for his alleged offences against building and bankruptcy laws.

They say the manner in which their complaints were handled illustrates the shoddy state of Victoria’s consumer protection system for home owners –“it’s basically regulatory inaction and buck-passing between agencies,” Quartel says. Consumer Affairs Victoria, the Building Commission and federal agency Insolvency and Trustee Service Australia have all been given documentary evidence of Watson’s alleged multiple breaches of building and bankruptcy laws at various times over the past 2½ years.

When Quartel wrote to the former minister for consumer affairs, he had already been pursuing Watson for more than six months.

”I have so far been unable to find a body with any investigative/regulatory powers to look into my suspicion of fraud,” he wrote. ”A person from Insolvency and Trustee Service Australia described the builder’s actions as unconscionable, then went on to say that the crime of knowingly taking on a debt that can’t be honoured doesn’t come under their area of coverage.

”Similarly, Consumer Affairs have advised me that it doesn’t come under their scope either. It strikes me as entirely unacceptable and illogical that we can have laws in effect, but then no regulatory body capable of enforcing them.”

Tony Robinson’s office referred the complaint back to Consumer Affairs.

In August last year, Keighley also contacted the Building Commission, which advised her to attempt on-site conciliation with Watson. Instead, she took him to VCAT in an attempt to recover more than $85,000 in costs. But Watson did not attend the preliminary hearing, and he has so far ignored the court’s notice to pay.

”He’s got no assets, so we can’t chase more money,” she says.

The Building Commission told The Age it has no record of the case coming to its attention before December last year, some nine months after Quartel wrote to the former minister, and three months after Keighley contacted the commission. She is furious at the authorities’ failure to stop Watson before he defrauded her family, even though alarm bells had been ringing about him for months before.

“If they had acted on the complaints that Peter [Quartel] put to them and notifications of this person two years ago this wouldn’t have happened,” Keighley says.

”All these people know about these things but they don’t do anything about it, so they allow other people to be burnt.” Quartel is yet to see a cent of the money he is chasing either, not even the $110 that a magistrate in Ringwood Magistrates Court ordered Watson to pay for a replacement window in 2009. Never received anything.

It took until October this year for the first decisive move to be made against Watson, when the Building Practitioners Board suspended his registration – which bars him from taking on any work – pending a disciplinary hearing later this month where he will answer 17 charges of professional misconduct. He faces being deregistered as a builder.

Even so, he is still advertising as a registered builder online, accompanied by a number of dubious customer reviews singing his praises. The most recent testimonial was posted on truelocal.com.au two weeks ago. Two earlier testimonials were posted under Watson’s own name.

”Wat’s On Top Constructions built a timber deck for us and I was really happy with their work. All my friends have commented about how good the deck looks. I would recommend Tim for your next building job,” reads one glowing review, which is signed Wally of Mornington, but posted in the name Tim Watson, alongside the builder’s Facebook profile picture.

It is understood Watson could also be investigated by the federal government agency Insolvency and Trustee Service Australia for alleged breaches of the Bankruptcy Act.

In a previous interview with The Age, Building Commissioner Tony Arnel insisted that every complaint the commission received about a builder allegedly breaking the law was investigated.

”We always investigate and if that then leads us to a situation where there is a case to answer, that case is then referred to the Building Practitioners Board, who acts in an independent way,” Mr Arnel said.

The Age attempted to contact Tim Watson yesterday, but he did not return calls.